Cambridge AS level Economics 9708 past paper 2 questions
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Module
Economics
Institution
Fifth Year / 11th Grade
Cambridge AS level Economics past paper questions.
"Preparing for the Cambridge AS Level Economics exam? Look no further! Our collection of past paper questions provides comprehensive coverage of essential topics to help you ace your exam with confidence. Whether you're revising for a mock exam ...
2017 to 2022 Section B questions (2023 exam preparations)
Question 2
1. (a) Explain the difference between public goods and private goods. Consider why profit can be made
through the supply of one type of good, but not the other. [8]
Discuss why merit goods may be under-consumed in a mixed economy. Consider whether maximum
prices or education campaigns would be more effective in ensuring that these goods are supplied in
appropriate quantities. [12] 9708_m17_qp_22
2. (a) Explain the role of the factor enterprise in allocating resources in a market economy when there is an
increase in the demand for a good. Use a diagram to support your answer. [8]
(b) Discuss two methods of increasing the provision of merit goods in a mixed economy. Consider
which is more likely to be effective. [12] 9708_s17_qp_22
3. (a) Use the concept of income elasticity of demand to explain how a rise in incomes would affect the
demand for an inferior good and for a necessary good. [8] 9708_s17_qp_23
(b) Discuss the range of policies that are available to businesses to increase sales when incomes are
falling. Consider which is most likely to be successful. [12]
4. (a) It has been reported that the world demand for chocolate is increasing at a time when the supply of
cocoa beans, the raw ingredient required to produce chocolate, is not as large as expected. Explain, with
the help of a diagram, the likely effects of these changes on the world market for chocolate products. [8]
(b) Very high consumption of chocolate can lead to health problems such as obesity and diabetes,
especially amongst young children in developed economies. Discuss what is likely to be the most
effective policy to reduce these problems. [12]
5. (a) Use a diagram(s) to explain how a production possibility curve can be used to show
opportunity cost and why such a curve is usually drawn with increasing opportunity costs. [8]
(b) Discuss whether the principle of comparative advantage concludes that a movement to free trade
will always result in an overall benefit for an economy. [12]
6. (a) Explain how the fundamental economic problem is addressed in a planned economy and in a market
economy. [8]
(b) Discuss the view that in a mixed economy the only role of government should be to provide public
goods and the supply of merit goods should be left to the private sector. [12]
7. In many economies, the use of cash is declining as people use contactless payments that transfer
funds directly between bank deposits.
(a) Explain what represents money in a modern economy and how the use of contactless payments
without the use of cash will affect the functions of money. [8]
(b) Discuss whether an expansionary monetary policy will be successful in correcting deflation.
[12]
8. In 2018 the UK government, concerned about the rise in obesity, particularly amongst young people,
imposed a tax on producers of sugar-sweetened drinks.
(a) State what is meant by a demerit good, and with the help of a diagram(s) explain how a tax on
producers can improve the allocation of resources in the market for sugar-sweetened drinks. [8]
(b) Compare the likely effectiveness of a policy of imposing minimum prices on demerit goods with one
other policy to improve public health and consider which policy is more likely to be successful. [12]
9. (a) Explain why demerit goods are over-consumed and merit goods are under-consumed. [8]
(b) Discuss the extent to which the introduction of a maximum price in a market will benefit consumers.
[12]
10. (a) Explain whether private goods, free goods and public goods will all be sold in a free market
economy. [8]
(b) Discuss whether the direct provision of goods and services by the government prevents the price
mechanism from working effectively. [12]
, 11. Market research has estimated that the cross-elasticity of demand for hotels in Barbados with
respect to the price of flights to Barbados is –2.5, and that the cross-elasticity of demand for flights
to Antigua with respect to the price of flights to Barbados is +0.5.
(a) Explain what is meant by cross-elasticity of demand and what these values mean in terms of the
effect of changes in the price of flights to Barbados on
(i) the demand for hotels in Barbados, and
(ii) the demand for flights to Antigua. [8]
(b) Growing pressures on the budget and on the environment from increasing tourist numbers to
Barbados led the government to announce a new indirect tax on incoming tourists in June 2018.Discuss
the likely effectiveness of the new indirect tax in raising tax revenue and reducing tourist numbers. [12]
12. When a planned economy introduces the price mechanism to allocate some resources, a mixed economy
arises.
(a) Explain, using examples, why merit goods are classified as private goods rather than public goods.
[8]
(b) Discuss the advantages of a mixed economy and whether it is always preferable to a planned
economy. [12]
13. In March 2016, the United Kingdom government announced that it will introduce a ‘sugar tax’ on the
producers of fizzy soft drinks in order to reduce child obesity.
(a) Using an example of each, explain the differences between direct progressive taxes and indirect
regressive taxes. [8]
(b) Discuss whether a sugar tax or an educational campaign on healthy eating is more likely to reduce
child obesity. [12]
14. (a) Explain, with the help of diagrams, how (i) constant and (ii) increasing opportunity costs determine
the shape of an economy’s production possibility curve. [8]
(b) Discuss what the most significant issues of transition are that a country will face as it moves from a
planned economy to a mixed economy. [12]
15. (a) Using examples, explain why merit goods are said to be under-consumed and demerit goods are
over-consumed. [8]
(b) Discuss whether merit goods should always be subsidised and demerit goods always taxed. [12]
16. (a) With the help of a production possibility curve diagram(s) compare growth in the productive capacity
of an economy and growth that results from a reduction in the quantity of unused resources in an
economy. Explain one reason that might cause each to occur. [8]
(b) Discuss the disadvantages of a planned economy and consider whether the transition to an economy
in which many resources are allocated by market forces is likely to be of overall benefit. [12]
9708_s22_qp_22
17. (a) A government has decided to spend money building a new barrier to prevent flooding across a city.
Explain why this flood defence barrier is likely to meet the characteristics of a public good. [8]
(b) Education and healthcare are considered to be merit goods. Discuss why merit goods are provided
by both the private sector and the public sector. [12]
18. (a) Explain, with the help of examples, how imperfect information among consumers affects their
consumption of merit goods and demerit goods. [8]
(b) Discuss why in most mixed economies, resources are mainly allocated using market forces and the
price mechanism. [12]
19. (a) Explain how economists use the concept of income elasticity of demand to distinguish between
different types of goods. [8]
(b) Discuss whether an understanding of price elasticity of demand is of more benefit to a producer of
agricultural goods than an understanding of income elasticity of demand. [12]
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